[BoulderCouncilHotline] Proposed Oil and Gas Regulations - Staff responses to City Council questions

[Guiler, Karl]

Dear City Council members,

Below are responses to the questions posted by council members Mark Wallach and Nicole Speer on the proposed oil and gas regulations. Please let us know if there are any additional questions. Planning & Development Services (P&DS) staff and a hired consultant on the oil and gas industry will be available at tomorrow's meeting to help answer questions.

Best,

Karl

Karl Guiler, AICP
Senior Planner/Code Amendment Specialist
[City of Boulder Planning+Sustainability]
O: #303-441-4236
guilerk at bouldercolorado.gov<mailto:guilerk at bouldercolorado.gov>

Department of Planning & Development Services
1739 Broadway, 3rd Floor, Boulder CO  80306-0791
Bouldercolorado.gov<http://www.bouldercolorado.gov/>

Responses to Councilmember Wallach's and Councilmember Speer's questions on Oil and Gas Regulations
Dec. 13, 2021

1) First, have we received a legal opinion establishing that the new legislation permits regulation, but not an outright ban on oil and gas extraction within City limits? Is there no way, without invoking the taking clause, that oil and gas extraction can be banned?
This question is touched upon on page 7 of the memo and will be further addressed separately.

2) The proposed ordinance provides for a 2,000-foot setback from residential structures for single wells. Was this distance chosen only because other jurisdictions have done this, or is there a different rationale? Why not 2,500 feet? Or 3,000 feet? Are we entirely reliant upon the precedent established in other communities, or is there another basis for selecting 2,000 feet instead of a larger setback distance?
The 2,000-foot distance is informed by the Colorado Department of Public Health and Environment (CDPHE) study conducted in 2019, which found,  at the measured distance of 2,000 feet, potential impacts from oil and gas operations on human health, particulates in the air were detected and considered potentially harmful. This substantiated the need and authority of local jurisdictions to require detailed studies, reports and plans for any request for oil and gas development to determine that there are no impacts or that impacts would be reasonably mitigated. The study also informed changes to state legislation which at the time only had a 500-foot buffer from wells in the pre-production stage.  The pre-production stage includes the drilling phase when the most impact to surrounding properties could occur.  As a result of the findings of the study, COGCC and many local jurisdictions adopted a 2,000-foot setback into their regulations with varying allowances for variances to this setback. Links to this information are included as follows: CDPHE website<https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcdphe.colorado.gov%2Fhealth%2Foil-and-gas-and-your-health&data=04%7C01%7CGuilerK%40bouldercolorado.gov%7C845cc98454a644d6298108d9be963bed%7C0a7f94bb40af4edcafad2c1af27bc0f3%7C0%7C0%7C637750374732667998%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=JYx1WhYKgcr58TE%2F1N36Q0y6t%2B2zicosEDY22EKWw5o%3D&reserved=0>; the CDPHE study<https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdrive.google.com%2Ffile%2Fd%2F1pO41DJMXw9sD1NjR_OKyBJP5NCb-AO0I%2Fview&data=04%7C01%7CGuilerK%40bouldercolorado.gov%7C845cc98454a644d6298108d9be963bed%7C0a7f94bb40af4edcafad2c1af27bc0f3%7C0%7C0%7C637750374732677955%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=Ku4yAxRsT0pkBvcIninwCDONuSuAFkOT4Wh69zoEjsU%3D&reserved=0> and an article<https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcoloradosun.com%2F2019%2F10%2F17%2Foil-and-gas-drilling-health-impacts-colorado%2F&data=04%7C01%7CGuilerK%40bouldercolorado.gov%7C845cc98454a644d6298108d9be963bed%7C0a7f94bb40af4edcafad2c1af27bc0f3%7C0%7C0%7C637750374732677955%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=lQ6corHl%2FojwzlxBWRRDacq9GRWplBEpLhrzeZcw4hw%3D&reserved=0> discussing the study findings that preceded the state law changes that enacted the new 2,000 foot setback.

2) Why does OSBT involvement occur only if the proposed site is within 1,500 feet of open space? Why not the same standards as for residential setbacks?
Currently, the land use code does not have standards that anticipate referral of a development application to the Open Space Board of Trustees (OSBT).  This requirement is directly from the Boulder County regulations. The 1,500 feet is based on the county's typical noticing distance and the county's requirements for referral to its Parks & Open Space Advisory Committee (POSAC) when an oil and gas operation site is proposed near Boulder County open space. The proposed standards also allow for a referral to POSAC where an oil and gas operation site is proposed near Boulder County open space.  Staff felt it prudent to keep the requirement within the regulations.

3) Why do we permit oil and gas extraction in both agricultural and industrial zones? With respect to the former, is it merely because we have historically permitted mining operations on agricultural lands? I would suggest that this is a new ordinance, and an opportunity for new standards, if they are justifiable. The impact of oil and gas extraction activities on agricultural lands would seem to me to be more impactful than similar activities in industrial zones, but perhaps this is not the case. I also note that Erie restricts this activity to heavy industrial zones, indicating that a more restrictive policy might be possible.
Yes, the city's current regulations (not considering the current moratorium on oil and gas drilling) was the primary rationale for why oil and gas operations are recommended for the Industrial Manufacturing (IG) and Agricultural (A) zones. More specifically, Mining Industries, which in the current code include oil and gas extraction, are permitted by Use Review in those zones. Mining Industries, in earlier codes described as "Extractive Industries" have been allowed through a use review type review in the agricultural and industrial districts for over 50 years in Boulder.  No additional requirements other than the Use Review criteria would apply. Staff felt it appropriate to continue to permit in the same areas where mining industries are currently permitted rather than increasing or decreasing the scope.

4) How substantial is our control over methane emissions? They are not even mentioned until page 77 (Section 12(D)(iv)), and it is not clear to me that we have placed adequate restrictions on methane emissions. I am the furthest thing from an expert in this field, but I would hope for some assurance that we have the capability to fully regulate methane emissions. On page 84 the operator is required to provide notice if there is an increase in methane in a water source. What are our remedies in the event of such notice?
The Colorado Air Quality Control Commission and Colorado Oil and Gas Conservation Commission (COGCC) combined regulations provide for comprehensive and robust regulations that eliminate or reduce methane as well as other emissions from oil and gas activities that are co-emitted with methane.  The proposed local regulations fill in gaps where the state regulations do not apply or where we have identified the need for more stringent regulations.  The combined local and state regulations eliminate all methane and other natural gas emissions that can be eliminated, and where such emissions cannot be eliminated, the combination of the local and state regulations significantly reduce such emissions.  If there is an increase in methane emissions, the operator must conduct additional sampling to determine if the source is oil and gas operations or not.  If the sampling demonstrates that the source is oil and gas, the operator is required to clean up the spill according to state, federal and local laws.  Such laws include the COGCC and EPA regulations.

5) Seismic testing has an 800-foot radius restriction. What led to that specific distance?
Seismic testing requirements are not common in Colorado. The 800-foot radius relates to the area to be analyzed in the application and where notice requirements apply.  Boulder County included the seismic testing requirements in its land use regulations and the specific requirements were adapted from a locality in Pennsylvania. Staff inquired with Boulder County on this and the research on this has shown that impacts from seismic testing are more localized (e.g., vibrations) and that impact research is how the 800 feet was determined.

6) Section 13(AE) permits the imposition of financial guarantees, but does not specifically address the clean-up of abandoned wells. Is this dealt with in the Abandoned Wells Plan? In other states there are many wells that are simply abandoned when the operator declares bankruptcy, rendering previous promises to clean them up irrelevant without letters of credit, bonds or third party guarantees that can actually be relied upon. Will we have protections against this eventuality? Page 90 provides for financial guarantees "in form satisfactory to the city?" What about in amounts satisfactory to the city? How substantial are the guarantees/letters of credit that may be imposed? Will they cover both the direct costs of decommissioning wells as well as any indirect environmental damage?
The City does not have authority over the clean up of abandoned wells.  That falls within COGCC's authority.  If a well leaks after it has been plugged and abandoned, COGCC will work with the operator to address the cause of the contamination and to remediate the site.  The COGCC has an orphan well fund that it can use to pay for the plugging, abandonment and remediation of orphaned wells. In addition, the COGCC is updating its financial assurance rules to require greater bonding amounts for such activities, raise more money from operators to fund the orphan well program, and require insurance that for environmental contamination.    The City has authority to determine if clean up has been satisfactorily performed.

9-6-12(b)(11)(H) requires the applicant to provide adequate financial assurances to guarantee performance of all conditions of approval for the lifetime of the oil and gas facility up to and including final reclamation.  The type and amount of the financial assurance will be determined by the city manager.  This provision allows the city to determine the type (I.e., a bond) and the amount, which may vary based on the nature, size and location of the oil and gas facility and the availability of any other bonds, such as state required bonds.  The current COGCC financial assurance rulemaking will help inform an appropriate amount since the state bond amounts are being revised.

7) As other jurisdictions - such as Boulder County - have not provided the opportunity to apply for a variance if standards cannot be met, why do we? It would seem to me that providing for a variance procedure is an invitation to litigation. Again, we may never face this prospect, as the likelihood of an attempt to receive a permit to commence oil and gas extraction in the City of Boulder is small, but on the theory that one never knows, it might make more sense to set out a set of firm standards without providing for variances from that standard.
Boulder County has significantly more eligible land than the city of Boulder so the county determined that variances were not necessary. As there is a constantly evolving legal and technological landscape in the oil and gas industry, city staff opted to provide some flexibility in their regulations, as Broomfield does, to allow some alternative methods of mitigating impacts or meeting the intent of the regulations.

8) In the event a permit is issued it will provide for 10 years of operation before reapplication is required. That is a very extended period without any interim review. Is such a long permit period required?
The 10 years proposed is derived from the Boulder County regulations on oil and gas. A shorter duration could be explored to make the uses more responsive to best practices.  However, staff does not suggest that the validity period be changed at this time, but rather only after there has been a feasibility analysis to understand the potential financial impacts if the validity period is reduced.

9) As discussed in the staff memo, the reverse setback of 500 feet from an operating well seems quite small. Why was this distance selected, and what is the basis for doing so?
Studies on reverse setbacks appear to be rare at this time. Because of this, there is little consistency between jurisdictions on whether they have regulations on reverse setbacks or not or what the rationale for the setbacks are not prevalent and is only recently becoming something more common in local requirements. Studies, however, do show that the highest potential for impacts from oil and gas operations is during the pre-production phase when site prep is being done and during drilling. This is when a lot of particulates can go into the air etc. Therefore, the strict application of the 2,000-foot setback is applied during that time period. Impacts substantially reduce in the production stage which is when the oil and gas is extracted, hence the lowered setback. The topic of setbacks may be something that requires updates to the oil and gas regulations upon any new findings that can inform the setbacks. The city is attempting to balance reasonable protections for uses and avoiding any takings of land use rights from property owners that could occur if oil and gas locates near their properties.

Questions from Councilmember Speer:

10) Do we have data on health impacts beyond 2,000 ft). Will your responses make it into the presentation and/or be sent to all of us?
The city's hired consultant who is an attorney and expert on the oil and gas industry is aware of at least two studies that present data on potential impacts beyond 2,000 feet. She will be available at tomorrow's hearing to help answer questions on this topic.

11) I am also curious if anything in the proposed ordinance addresses potential impacts to the broader community and whether there is any way to address that issue (that health impacts of oil & gas extraction go well beyond 2,000 ft). I'm thinking of our 2.5 months of horrendous air quality last summer and the role that pollution from oil & gas operations played in keeping vulnerable people indoors and exposing a lot of others who weren't quite as at risk or weren't able to stay indoors to avoid exposure to dangerous levels of pollution.
Yes, the review criteria require consideration of whether the use will not cause or contribute to exceedances of the national Ambient Air Quality Standards, cause degradation to air quality, or compromise the attainment of ozone standards for the Denver Metro/North Front Range ozone non-attainment areas established by the US Environmental Protection Agency.  The standards in particular require in Section 9-6-12(b)(12)(D):

Air quality and dust: The use will:
(i) Avoid or sufficiently minimize and mitigate emission-related impacts to public health, safety, and welfare and the environment;
(ii) Not cause or contribute to exceedances of the National Ambient Air Quality Standards, cause degradation to air quality, or compromise the attainment of ozone standards for the Denver Metro/North Front Range ozone non-attainment areas established by the US Environmental Protection Agency;
(iii) Not contribute particulate matter to the air in a manner that fails to protect
public health; and
(iv) Eliminate, capture, or minimize all potentially harmful emissions,
including methane, minimize and contain dust associated with onsite
activities and traffic to the property, and demonstrate how the operator
will prevent and mitigate gas leaks and air emissions.

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